Financial Genius

The concept of a ‘free economy’ recently surfaced in a press release for a company that I’ve been following closely for more than a year.

It should be preemptively noted that the idea of free economy is different than that of a ‘free market’ in which no regulation, subsidization, single monetary system, or governmental monopolization exist (think barter and trade). The idea of free economy is an easily misconstrued one that speaks to the capitalized benefits or distractions introduced, and taken advantage of, during the course of a percentage of consumer experiences with a monetarily free product or service.

This idea has been exorcised without a name for ages — but as we know and as is important in our corporate analysis as investors — with a name, all things in our culture tend to become more popular as they are more easily referenced and recognized. Now that the ‘Open Source’ community has exploded over the last decade, along with software patent protests and plenty else, a massive industry has been born from the idea of free economy. In these models, software is usually offered free of charge, and the company accepts payment for support services or additional software features that might be more tailored to enterprise utilization; thus, they target the guys with money in their pockets.

Recently, I got an idea started for a new company of mine that will greatly utilize, but well balance, the idea of free economy. In this business, I will utilize a key service, which I offer to consumers without charge, to keep consumers and past customers on, and coming back to, the retail website on a regular basis. This provides many benefits for the company and as such is much more than worth the cost of upkeep for the free service.

In any case, it does make you wonder where a world populated by free economy will end up. If everyone offers a free product or service to attract more uptake for their paid product or service, how long will it be before crossover begins to rear its head on a massive scale? For instance, if I offer free use of inventory tracking software with the hopes of getting the consumer to purchase my physical inventory bar-code tags, but someone else is offering a free system to help print your own inventory bar-code tags while wanting you to purchase their inventory tracking software, why wouldn’t I just grab the best of both worlds for free.

Such an act would hurt both business models. While support is one service offering that’s difficult to overlap, there are valid instances in which this crossover could do some serious damage to hard-hitting business models.

Supposedly, there are also some good books on free economy. The one recommended in the eDoorways press release I mentioned earlier is called “Free: The Future of a Radical Price“. While I haven’t read it yet, I certainly intend to. Perhaps Mr. Anderson has some answers for me.

In any case, if free economy is our future, how can I — as a consumer, myself — really complain? Does it inch us closer to a truer idea of a free market or does it inch us closer to communism? Is it better or worse? Even if support becomes free, only as a matter of necessity, wouldn’t it be interesting to exist in such a system? Where would that leave business in general, and where would it leave our race?

With such deep questions, I imagine you can see the root of my desire to get my hands on that book, but for now, free economy is what it is. It will take its toll on business, and it will provide opportunity for business as it is doing for eDoorways, as it will do for the company that I’m working to build, and as it has done for many companies in the last decade.

Thankfully, no matter how unknown the future is, being armed with these new ideas will help us to make more informed decisions, regarding potential investment opportunities, when presented with the term free economy, and we will be better able to understand the cause, caution, and opportunity behind a price of “free”.

~A

Readers,

I am often asked the question, “Who do you trade with?”  Unfortunately, the answer is not so simple, and in most cases, the inquisitor seems to expect the business card for a good brokerage agent or firm like they would expect a lawyer in times of trouble.  On the contrary, and without much detail, what they usually receive is a targeted answer based on what I know about where they’re attempting to invest and how experienced they are as a trader.  More truthfully, I utilize several platforms and avenues for different purposes.

I never use a broker if I don’t have to, because they have a mind and emotions of their own.  Brokers are only necessary when securities cannot be traded electronically.  Very few securities are setup like this these days, but it still happens on occasion.  When it does, you want a “drone” broker.  Drone brokers are gentlemen that sit at a trading desk all day long taking hundreds of orders a day.  If you use a TD Ameritrade broker; they’ll take care of you — quickly.

TD Ameritrade is the best and the brightest when it comes to trading penny stocks and maintaining watch lists.  I also enjoy their day-trading platform when I’m moving pennies like a dump-truck.  The thing about penny and sub-penny companies is that they tend to change their names and trading symbols often.  I’ve had other platforms miss the ball when these changes occur, but Ameritrade hasn’t missed it once for me even though I had a small form to sign and fax back when I initially got started.

Knowledgeably and service is also no shortcoming of Ameritrade’s.  When you call, there’s a solid specialist always ready to assist.  When you have a question, it can be answered by an online AI agent, a knowledge base of media-rich training presentations, or the same helpful specialist.

While their cash sweep system can sometimes be confusing to newcomers, Ameritrade has fewer distractions than any platform I know of which is why I usually recommend it to beginners.  This forces a new investor to seek out sources for information, learn about the SEC and FTC, understand options and futures, learn to differentiate emotion from sound decision-making, and understand the effect of the press.

One additionally nice feature of Ameritrade is that they allow account linking and nice separation.  This means that if you’re assisting a family member or friend with trades or if you’ve inherited securities, it’s easy to keep your securities separate from theirs while still being able to excercise control over the assets.  This tends to help at tax time.

E*Trade is easy to setup, they are a full-fledged banking system, their FDIC insurance can cover into the millions of dollars, and they make you physically sign the fewest number of forms of any trading institution I’ve ever worked with.  E*Trade allows for after-market trading and the standard futures, options, etc.

What E*Trade has that the others don’t is simple global trading.  In the past, global market trading was a nightmare.  I now use E*Trade for all of my global and large-sum US investments (thanks to their insurance rating) as well as for alternate checking and savings accounts when Wells Fargo is just gettin’ me down.

I also participate in IPOs (Initial Public Offerings) published by underwriters (usually a banking institution).  One of the biggest underwriters in many IPOs is Wells Fargo.  Since I bank with the “Farg” on a regular basis, I usually don’t have too much trouble picking up securities when they first hit the exchange.  This is a very different process from your common security investment process, but E*Trade is offering a simple way to do this now too.  I plan to participate in my next IPO through E*Trade.

Unfortunately for E*Trade and their customers, I rate their customer support as a “low”; that’s as in “devil’s basement” low.  The staff person I most recently conducted business with had, “… worked with the system for two years now…”, so he thought he had it all figured out.  The second representative had a similar mindset but must not have been there for quite as long, because his mind was still open to some degree.  After nearly reaching through the phone a few times, he was finally able to assist me.

When it was all said and done, I felt like appending, “Now that wasn’t so hard, was it?”, to my sigh of relief, but I didn’t.  On second thought, being open-minded enough to assume that they must be brainwashed slowly over the course of employment, I gave them the benefit of the doubt and thought that maybe it wasn’t really their fault.  For those who hadn’t been brainwashed long enough, it still seemed that there was hope for them yet.  It just takes a strong customer willing to repeatedly tell them they are wrong until the light bulb goes off.

Zecco is the MySpace of trading.  They offer group discussions, show member earnings like it’s all a contest, and by far look the coolest.  Unfortunately, the signup process includes a lengthy agreement that makes me feel for the poor schmuk who was forced to write it.  Personally, I’m not a huge fan of the service overall, but it’s a good source for learning how the common public investor thinks and operates with consistently visible emotion, and the concept also helps we experienced traders have more volume, readability, and return in our daily practiced habits.

What’s really sad about this platform, is that it breeds bad trading practices.  Inexperienced traders see success dangled in front of them like a carrot in front of a rabbit and then turn around and participate in the emotional discussions brought on by other terribly inexperienced traders.  This keeps them losing and tugs on my heart strings a little every time I think about it.

In all, the platform you choose depends on your needs and experiences.  Obviously, one platform wasn’t good enough for me, and it may not be good enough for you either.  I’ll tell you one thing though; no private brokerage agent was ever good enough for me.

~A

Readers,

Though Engadget is sceptical, it looks like Toshiba is now sitting on the front-line of portable fuel cell technology. By using methanol as the base for an electron-spitting concoction, Toshiba has promised fuel cell technology by the end of this quarter. While this is astonishing, to say the least, it’s not without its caveats.

Methanol, while it will more than likely come in cartridge form, is a liquid. 10 millileters of this stuff can cause you to go blind, and a tiny 100 millileters can tear you from this life and catapult you directly to the next. Then again, how far is that from the sulfuric acid that many batteries contain?

However, I expect the biggest concern, keeping with the recent energy and health theme, will be centered around the production of methanol. Some forms of methanol production require coal or oil. Fortunately, methanol can also be produced from methane and rust!

In fact, the early stages of this process produce, what’s known in the industry as, syn-gas which can be used as a fuel source or refined to pure methanol. As we now know, refined methanol can be used as a solid power source.

Even better, when methanol is used to produce electricity, it’s offshoot is water vapor. While this may be a small stumbling block when considering the visual of a leaky or moldy MP3 player, it’s one that I’m sure will be overcome by careful engineering.

Also, there are already eighteen methanol producing plants in the US not to mention the biomass plants that are beginning to pop up with solidified plans for extracting methane from new landfills.

Environmentally-friendly electric cars and devices, here we come. Thanks Toshiba for taking the big leap; I wish you well in dealing with the first heat wave. For the rest of us, we’ve got plenty to look forward to.

While I can’t recommend Toshiba as a buy, I do recommend looking at other companies pioneering similarly cool scientific advantages; get ‘em while they’re young!

~A